Insurance industry on El Nino watch.

The U.S. Climate Prediction Center (CPC), a government agency that provides weather information to the insurance industry and others, has raised concerns that El Nino may make a strong return to the Northern Hemisphere later this year. The weather phenomenon is notorious for the number of natural disasters it spawns throughout the Northern Hemisphere. El Nino brings an increase in rainfall and changes to temperature and wind patterns in some parts of the world. The CPC notes that El Nino could have a disastrous effect on the vital crops that are to be harvested later this year, including soybeans, corn, and cotton.

Insurers in the U.S. have been struggling to maintain control over a volatile market created by recent natural disasters. In the past two years, the country has been inundated with catastrophes that have caused significant economic damage and produced billions of dollars in insured losses. Insurers had hoped that 2012 would be a much calmer year, but with powerful storms wreaking havoc early in the year and prospects of the return of El Nino that hope is dwindling quickly.

The CPC has not yet estimated what natural disasters could be produced by the return of El Nino, but has warned that the phenomenon could have serious implications for farmers in the U.S. and South America. The agency is currently working on drafting more accurate information and predictive models for the phenomenon and believes that farmers will be able to respond proactively one such data is made available. Nonetheless, the agency is warning insurers to prepare for a turbulent season.

The return of El Nino could be good news for the hurricane season. La Nina, the weather phenomenon that is largely blamed for the persistent doubt in Texas as well as severe storms in the Atlantic, is expected to dissipate on June 1. If El Nino replaced La Nina, the hurricane season is expected to be less active, though powerful storms could still form in the Gulf of Mexico.

Insurers claim they are ready for whatever disasters come to the U.S. this year, despite the costly losses seen over the past two years.